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Strategies & Market Trends : John Pitera's Market Laboratory

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From: Hawkmoon	8/22/2007 11:07:31 PM
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Good article from "The Big Picture" on the "Truth in Lending Act".. bigpicture.typepad.com "Some consumers burdened by escalating subprime mortgage payments are finding a way out. A growing number are suing lenders over inaccurate disclosure papers, and if they win they get to rescind the loans. While that's good news for individuals, it's a potential problem for investors exposed to subprime mortgages. These investors, already buffeted by the subprime mortgage meltdown, are facing a new risk - the mortgages supporting some of their investments may not be enforceable because of violations of state and federal consumer protection laws. It's not clear yet how widespread or successful these lawsuits may become. "Depending on how widespread, this could be a minor bump in the road or this could be a very significant factor," says Barry Ritholtz, chief market strategist at Ritholtz Research & Analytics. The subprime market has been known for its lax standards in documentation and the proliferation of these loans in recent years is now fueling significantly more complaints. The subprime share of first mortgages rose to 13.4% in the first quarter of 2007 from 10.9% in the first quarter of 2004."

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